Dukascopy Bank Team
Dukascopy Bank SA
Technical Analysis
EUR/USD to extend recovery
“The combination of [the retail sales and PPI] and the pretty awful data we’ve seen thus far in September is pushing back when the Fed will hike, lowering the odds of December and raising the odds of 2016.”
- Credit Agricole (based on MarketWatch)
- Pair’s Outlook
The fundamentals overrode technicals yesterday, and weak US data threw EUR/USD over several important resistances, paving the way for an extension of this rally. The upside is no longer limited by the monthly R1 and September high. And even though the long-term indicators are bearish, the pair has a good chance to visit monthly R2 at 1.1613 and even attempt to break higher. Still, we would like to see confirmation of the new support at 1.1450 first.
Traders’ Sentiment
Yesterday’s spike resulted in a change in the SWFX sentiment, which became bearish (61% of positions are now short). At the same time we note a material increase in the share of buy orders. These could be SLs that may accelerate the move if the price keeps rising.
GBP/USD in limbo, awaits US data
“Rather than advancing higher or attempting to recover momentum against the dollar, it looks far more likely that sterling will continue drifting towards $1.51, with this being the level where traders found confidence throughout previous weeks that this might be a 'bottom' for the pair.”
- FXTM (based on Business Recorder)
- Pair’s Outlook
In spite of worse-than-expected UK fundamentals, the Cable managed to surge on poor US economic data on Wednesday. The 229-pip rally was stopped only by the third resistance cluster around 1.5485, which might cause the Sterling to undergo a correction today. Nevertheless, if the US data turns out to be weak again today, the British Pound could reach a four-week high at 1.5568, bolstered by the 38.20% Fibo at that point. Technical studies also suggest the given pair is to edge higher by the end of the day.
Traders’ Sentiment
The number of long positions remains unchanged since yesterday, taking up 58% of the market. The share of purchase orders, on the other hand, increased 17 percentage points to 52%.
USD/JPY on the edge of breaking ten-month support
“We look for annual headline inflation to slip into negative territory (+0.2% to -0.1%/y) while core inflation should hold firm at +1.8%/y (all as mkt expects).”
- TD Securities (based on FXStreet)
- Pair’s Outlook
Although the Buck broke out of its four-week consolidation range, the wider trading range remains intact. Technical indicators are now giving bearish signals, but a tough support rests near 118.50, as it held the pair from falling since February 2015. Another set of very weak data is required to push the USD/JPY beyond this level; therefore, a rebound is possible, with the Greenback’s upside border lying around the 120.00 level, also surrounded by a number of resistances. However, risks of breaking the 118.50 support also persist, which could then trigger a sharper fall towards the Jan low.
Traders’ Sentiment
Bullish market sentiment returned to its Tuesday’s level of 74%, whereas the portion of buy orders sharply dropped from 76 to 49%.
Gold runs over 200-day SMA
“The fact that gold is above the 200-day average after five months, it’s a very strong signal that gold is on the uptrend for the time being. The strength in the gold market is going to stay for a while.”
- Sumitomo Corp. Global Research (based on Bloomberg)
- Pair’s Outlook
We received a strong bullish signal yesterday, as gold effortlessly pierced through a dense resistance area, which was initially though to be able to hold the bulls at bay. This means the price is highly likely to keep increasing, while the next serious level will be only at 1,205 dollars, represented by the monthly R3. However, this resistance is unlikely to stay intact for long. Above it XAU/USD will continue its journey towards 1,230, where the highest level since May merges with the major falling resistance trend-line.
Traders’ Sentiment
People trading gold seem to ignore gold’s recovery. The sentiment has hardly changed since yesterday: the share of longs only fell from 52 to 50%. There are also no significant changes in the longer-term perspective: five days ago 53% of all open positions were long.
This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.